Correlation Between Franklin Emerging and New Perspective
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and New Perspective at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin Emerging and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Emerging Market and New Perspective Fund, you can compare the effects of market volatilities on Franklin Emerging and New Perspective and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin Emerging with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and New Perspective.
Diversification Opportunities for Franklin Emerging and New Perspective
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and New is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Franklin Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin Emerging Market are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and New Perspective go up and down completely randomly.
Pair Corralation between Franklin Emerging and New Perspective
Assuming the 90 days horizon Franklin Emerging Market is expected to generate 0.34 times more return on investment than New Perspective. However, Franklin Emerging Market is 2.99 times less risky than New Perspective. It trades about 0.14 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.03 per unit of risk. If you would invest 1,204 in Franklin Emerging Market on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Franklin Emerging Market or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. New Perspective Fund
Performance |
| Timeline |
| Franklin Emerging Market |
| New Perspective |
Franklin Emerging and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and New Perspective
The main advantage of trading using opposite Franklin Emerging and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, New Perspective can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Perspective will offset losses from the drop in New Perspective's long position.| Franklin Emerging vs. Upright Assets Allocation | Franklin Emerging vs. Qs Large Cap | Franklin Emerging vs. Dodge Cox Stock | Franklin Emerging vs. Strategic Allocation Aggressive |
| New Perspective vs. Davis Financial Fund | New Perspective vs. First Trust Specialty | New Perspective vs. Prudential Jennison Financial | New Perspective vs. T Rowe Price |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |